The world is making a massive shift towards digitalization. Today, we shop, socialize, and work from our electronic devices. Personal and business transactions are going digital, so it’s time to implement virtual cards for e-commerce payments.
E-commerce retailers can use virtual cards to their advantage. This digital payment style is more secure than traditional charge cards and can simplify business operations. Learn more about using virtual cards and how they can transform how your business buys online.
What Is a Virtual Card?
A virtual card is a digitally generated 16-digit card number that functions as an online charge card. You can use a virtual card in place of a physical credit or debit card and other online payment services and enjoy more secure spending. A virtual card is linked to a credit or debit account but is safer than traditional payment methods as they use a minimal amount of personally identifiable information (PII).
Virtual cards mask sensitive information and use a unique card number to shield data when users make online purchases or store their cards in a digital wallet. This card number differs from the account number, making it more challenging for hackers to access the primary user’s bank account.
Like physical debit cards, virtual cards come with the following:
- A unique card number.
- An expiration date.
- A security code.
A virtual card issuer can generate a card number on the spot with customized spending limits and the capability of revoking a card in seconds if necessary.
What Does an E-Commerce Retailer Use Virtual Cards For?
As many stores shift their focus to online rather than brick-and-mortar sales, e-commerce retailers are in a unique position. They must prioritize user experience and offer more to their customers. Many small online retailers do business with other vendors and services online to achieve this, which is where virtual cards can help.
E-commerce retailers often rely on their relationships with other vendors to keep operations running smoothly and fulfill their customer’s orders. Between outsourcing and subscriptions, many online stores find themselves shelling out online payments to multiple vendors every month. Virtual cards can simplify this process and give retailers more control over their finances.
Instead of using a corporate credit card to make a business purchase, you can give employees a virtual card with spending limits and an expiration date. Virtual cards are a convenient way of handling travel expenses for businesses with traveling associates.
Virtual cards make finances simple for e-commerce retailers. Management can efficiently distribute, monitor, and control card numbers in minutes.
Why E-Commerce Businesses Should Use Virtual Cards
Using virtual cards has a lot of benefits for online retailers. From being a safer alternative to traditional payment methods to offering better management controls, virtual cards can transform the way e-commerce businesses operate.
Virtual card numbers for online payments add an extra layer of protection for your finances. Guarding your finances is essential — even a minor incident of fraud or hacking can negatively impact a small business. The following are ways virtual cards keep money safe:
- Cards do not store PII
- Thieves cannot physically steal cards
- Cardholders can deactivate a card in minutes
In today’s cybersecurity landscape, it is more important than ever for a business to protect their private and financial information.
E-commerce businesses can enjoy more security and better control with virtual cards. From budgeting to trusting employees with corporate money, virtual cards give users better control over their finances. Having set spending limits and customizable expiration dates gives management more authority. With a virtual card, you can manage limits at specific merchants and prevent overspending.
Virtual Cards and Dropshipping
Some e-commerce retailers utilize an operational model called dropshipping to fulfill customer orders. In this model, the retailer does not carry the inventory they sell. Instead, they source the orders from other retailers called dropshippers. The business that made the sale has to then pay for the order, and the dropshipper processes it and sends it directly to the customer.
Retailers that use dropshipping can utilize virtual cards to make secure transactions between themselves and the retailer from which they source their orders.
Pros of Using a Virtual Card
Virtual cards offer multiple benefits.
1. Added Security
Virtual cards are more secure than their traditional plastic counterparts. When a business uses a virtual card, it can enjoy additional protection against theft and fraud. Since virtual cards do not share bank account numbers and can be deactivated in minutes, users can feel more secure while making online payments.
2. Simple Management
One of the greatest aspects of having access to virtual cards is the amount of control you have over spending. You can set spending limits at particular merchants to stick with your business’s budget.
3. Greater Convenience
With virtual cards, it is convenient to create or terminate cards as needed. Plus, businesses no longer have to write out checks or hand out corporate credit cards. They can make payments to other vendors and subscriptions with a secure virtual card.
4. No Physical Card
Physical cards are easily stolen or forgotten. When you have access to a virtual card, you do not have to worry about having your card because it stays in a digital wallet. Plus, the numbers associated with a virtual card are not linked directly to a bank account like they are with traditional credit and debit cards.
Cons of Using a Virtual Card
There are two minor cons to using virtual cards.
1. Making Returns
One downside of virtual cards is that you have to use them online. This can make in-person transactions more complex. If you need to make a return, you won’t have a physical card to swipe that matches the numbers on the card you paid with.
2. Regular Monitoring
Because users have so much control over virtual cards regarding spending limits and expiration dates, businesses must ensure that the right cards are active. With multiple cards, management will need to take regular inventory of spending.
Use Hydrogen to Build Your Virtual Card Issuing App
Virtual cards are transforming e-commerce as we know it. Whether a retailer utilizes dropshipping or pays vendors every month, having a digital card makes for more secure and convenient e-commerce solutions.
With so many benefits of using virtual cards, you may be interested in learning how to build your virtual card issuing app. Hydrogen makes it easy with configurable no-code solutions that you can work with whether you’ve had years of experience or none at all.
Interested in getting started? Sign up for Hydrogen today!